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Understand the Bitcoin Mining with its Methods, Profitability, and Tools

Key Takeaways
  • Bitcoin mining involves solving equations to record transactions on the blockchain, with miners earning commissions
  • Mining profitability has reduced, leading miners to join pools and consider electricity costs and hardware type
  • Different mining methods and hardware exist, but not all are profitable; it's crucial to evaluate costs and potential earnings
17 Aug 2023 By: Simran Mishra
Understand the Bitcoin Mining with its Methods, Profitability, and Tools

Bitcoin mining - what it is?     

Bitcoin mining is simply excavating them. A person that digs cryptocurrencies is a so-called Bitcoin miner. The mining process is the process in which blocks of blockchain are created. 

Each block requires a complicated mathematical equation to be solved. Transaction data is recorded on every created block. 

Bitcoin mining is a process that is very similar to gold mining which is the main reason, that obtaining Bitcoins has been called by mining them. 

Extracted coins are Proof of Work (POW) for their miners. By mining Bitcoins, miners receive a commission for approved transactions. 

The mining process is very complicated. A block can be created when the complicated, and random combination of characters and numbers finds its correct entry. 

Guessing the right series of characters unlocks the hash code, so the block is correctly mined and can be attached to the chain of blocks that already exist. 

These rules were created by the creator of Bitcoin - Satoshi Nakamoto (an unknown person or a group), before the first block has been mined. Bitcoin mining is simply the process of adding transactions record to a blockchain.

Is Bitcoin mining profitable?

Well, it has been profitable years ago. Before Bitcoin prices exploded, mining this cryptocurrency was super profitable, and just by getting basic mining hardware or even using GPU, miners could have gained a lot. 

Actually, this changed. Nowadays, Bitcoin mining is less profitable than it has been a few years ago. We can rarely spot a person who mines on his own. Most likely, they join bigger communities, called mining pools. 

By that, they gather a lot of computing power in one place, so the mining process can happen faster, and the given reward is bigger. Apart from this here you can learn more about the Internet acquiring.

It also often depends, on what hardware the miner uses. Classic laptop or GPU mining does not give such results as ASIC mining hardware. 

It is hardware that has been created strictly for mining purposes. It has a few GPUs or CPUs combined with mining software to give a good hash rate (so the Bitcoins can be mined faster). 

We also have to take the electricity price into consideration. There are places in the world, where electricity is cheaper than in other places. 

This is the main reason, why most of mined Bitcoins came from the East - the electricity is much cheaper here than in Western European Union countries.

Bitcoin mining pools - what are they?

When it comes to Bitcoin mining, dealing with that alone is very hard, because there are communities that share their computing power. 

Because of that, they have much higher chances to unlock the block, because their processors can do quicker solutions of character strings. Finding the best Bitcoin mining pools is not hard. 

There are many open communities that will welcome your processing power. Joining such a pool gives you a part of every unlocked block reward. The reward is divided in proportion to the computing power that you shared.

Free Bitcoin mining without investment - is that possible?

There are some people that believe this statement. The mining process requires a lot of factors to happen. For instance the hardware, and the electricity. 

None of this is free. Moreover, the more you can invest, the more you will probably earn. But there are some methods to obtain free Bitcoins, but they are super rare. 

There are some platforms and websites that allow you to get some satoshis (a small part of Bitcoin) for completing a task on their website. We can also spot a cloud mining process, which we will cover in the next paragraph.

Bitcoin cloud-free mining

Free bitcoin mining can be proceeded by cloud mining. In that process, you can select the platform and share your processing power. By that, you can get a bonus payment.

 This is a method often chosen as a bonus, not the main way to obtain a Bitcoin. It is not very profitable at all, the method provides up to a few dollars per month, depending on how much processing power can you share. 

To summarize, it is a method for free Bitcoin mining, but that does not pay off at all.

How much can you make on mining Bitcoin?

As we have touched on this topic above, it generally depends on how much can you invest. It is all about planning.

 For instance, if you want to generate a lot of money from Bitcoin mining, you need good hardware, that must be supplied with a lot of power. It generates the costs, but at the end of the day you still get some mined resources, you can sell. 

 If you are planning to mine cryptocurrencies such as Bitcoin, you must calculate everything. Take into account every factor that we have already covered before electricity bill cost, hardware costs, and time spent on setting that.

Bitcoin GPU mining

Except for special hardware and dedicated machines, you can try Bitcoin mining on GPU. 

What is the best GPU for mining Bitcoin and how does that run? The process itself does not differ at all. It is all about unlocking the hash code by solving mathematical equations with the power unit. 

GPUs have their processing power, so by that, they can be set for solving such strings of characters and numbers. 

Generally, the more expensive the GPU is, the more efficient it will be. Although, it is not as efficient as ASIC miners.

You can either choose Nvidia for Bitcoin mining, or Radeon video cards. It is worth comparing their efficiency and calculating the potential incomes. 

Best graphic cards for Bitcoin mining can be easily found in online communities, where miners share their opinions and graphic card performance in Bitcoin mining.

Bitcoin mining on the phone - is that possible?

Both Bitcoin mining on Android devices. Like every other Bitcoin mining hardware, it can be done, because it has processing power. 

There is special software that allows your phone to mine cryptocurrencies. Of course, it is not as profitable as any other method.